The conventional view that deficit spending generates inflation through an increase in bank reserves and the money supply is based on an unrealistic behavioral assumption, and is not backed by empirical evidence. Maximum auailable resources. Deficit spending is a powerful tool of government to mobilize maximum resources to realize human rights. Fiscal policy can mobilize resources in two ways: First, by keeping aggregate demand at the leve! that would buy all the goods and services that is possible to produce, that is at the level of full employment. Second, fiscal policy can achieve full employment by investing in the economy's productive capacity. Conventional views about deficit spending and borrowing ignore the growth impact and emphasize the risk of over-borrowing. Yet borrowing is justified only if it promotes future growth. The issue is not so much the level of borrowing (since the new liability creates a corresponding asset), but asset quality: how much of borrowing goes to creating assets that support human rights? (Balakrishnan et al, 2011) A first step to ensure that public borrowing is consistent with human rights is to allow for more transparent mechanism in the identification and approval of major investment projects financed by public borrowing. It is also important to consider the economy-wide and long-term impact of government investments. lnvestments in physical and human capital enhance productivity and support faster growth and higher incomes. ln turn, higher growth and incomes raises future government revenues, allowing the government to meet debt obligations. A reduction in public investments ostensibly to lower the deficit is self-defeating in the long run. This suggests that it may be necessary to distinguish between investment and consumption spending in estimating the deficit so that investment is not sacrificed. (Roy et al,2OO7) A common tool in the conduct of fiscal policy is debt sustainability analysis (DSA) which aims to assess the ability for the government to raise enough tax revenues to service the public debt. DSA suffers from insurmountable theoretical and practical infirmities. (UNCTAD, 2008; Akyuz, 2007; Wyplosz, 2OO7) Relying on DSA to guide fiscal policy can be costly to long-term growth and human rights. Non+etrogression. The principle of non-retrogression imposes an obligation to ensure that the enjoyment of human rights does not retrogress during periods of crisis. This is recognized by the standard view which emphasizes the use of targeted safety nets to alleviate the impact of crises. A broader interpretation of this principle recognizes an obligation to prevent or mitigate the frequency and depth of economic instability and periods of crises that could lead to a potential retrogression of human rights. Government deficit spending is critical to maintaining stability in a capitalist economy in three ways: First, deficit spending raises the demand for goods, services and labor during recessions (income and employment effect). Second, a deficit in the government sector generates a surplus and improves cash tlows in the private sector, sustaining economic activity at a time when households are reluctant to spend and businesses hold back investments (cash flow effect). Third, deficit spending financed by the sale of government bonds meets the private sector's need for safe assets in times of deep uncertainty (portfolio effect). (Minsky, 1986) Even from a standard macroeconomic point of view, there are grounds for the government to engage in more aggressive and sustained deficit spending. First, domestic and foreign interest